US Senator Cruz Introduces Bill to Prevent Federal Reserve From Using Digital Currency as Surveillance Tool – Senator Ted Cruz of Texas has introduced legislation that would prevent the Federal Reserve from releasing a central bank digital currency (CBDC) to individuals directly and competing with the private sector.
Not only will this CBDC model centralize financial information, making it vulnerable to attack, but could also be used “as a direct monitoring tool into the private transactions of Americans,” according to the Texas senator. Senators Chuck Grassley and Mike Braun are co-sponsors of the bill.
According to the bill, “no Federal Reserve bank could offer services or products directly to an individual, issue a central bank digital currency directly to an individual, or maintain an account on behalf of an individual.”
The bill “aims to retain the dollar’s dominance without competing with the private sector,” according to the announcement, which also states that “the Fed does not have the authority to issue retail bank accounts.”
The law forbids the Federal Reserve from building a direct-to-consumer CBDC that may be utilized by the federal government as a financial surveillance tool, similar to what is now being done in China.
According to the senator, central bank digital currencies must follow three essential principles: retain the dollar’s dominance, preserve financial privacy, and foster innovation.
CBDCs that don’t comply “may enable an entity like the Federal Reserve to turn itself into a retail bank, gather personal identifying information on users, and track their transactions indefinitely.”
“Unlike decentralized digital currencies such as bitcoin, CBDCs are issued and authorized by a government body and transact on a centralized blockchain,” the senator said.
This CBDC model would not only centralize Americans’ financial data, making it subject to attack, but it could also be utilized as a direct surveillance tool into Americans’ private transactions.
US Senator Cruz Introduces Bill to Prevent Federal Reserve From Using Digital Currency as Surveillance Tool – The Federal Reserve has yet to make a decision on whether or not to issue a CBDC. The Federal Reserve released a report in January that looked into several facets of a digital currency.
Some politicians and Federal Reserve governors are still debating whether the United States should create a digital currency. “I’m not sure I understand or see the commercial rationale for creating it,” Federal Reserve Governor Michelle Bowman said in November.